The World Trade Organization (WTO) was set up by the meeting in Marrakesh of its predecessor organization, the General Agreement on Tariffs and Trade (GATT), and came into existence in 1995. GATT itself had been created in 1947 as part of the post-war attempt to build institutions to control and develop world economic activity. The other two institutions founded in 1947, the International Monetary Fund (IMF) and the International Fund for Reconstruction and Development (better known as the World Bank) have been remarkably successful. GATT, however, had always been much weaker, because its general aim, the abolition of all barriers to free trade and the creation of a world with no local tariffs protecting national economies, was much more difficult to achieve. Much progress had been made by regular rounds of negotiations in lowering trade barriers, but inevitably these reductions had largely been in the interest of the more powerful economies, as GATT had no enforcement mechanisms, and only a very weak conflict resolution system.
The WTO was created in the hope that as a result of increasing globalization in the latter half of the 20th century, the ultimate goal of complete freedom of trade would now be more attainable. Nothing could be, or was done, about the fundamental problem, the lack of an enforcement system. The IMF and the World Bank can enforce their policy preferences by financial coercion—any country which wants a loan or other international aid has no choice but to agree to their analyses of its economy. The WTO however, like GATT, lacks any powerful central policy-making directorate, ultimately it is a mechanism for multilateral negotiations. Whatever enforcement comes about is enforcement by the general drift of international self-interests.
Where the WTO is clearly more effective than GATT is in its conflict-resolution system. It is not enough simply to get some general agreement on, say, the terms under which bananas will be produced and traded; because even if a satisfactory general agreement can be reached at one of the periodic international meetings, individual countries may disobey. Under GATT such acts of disobedience were adjudged by a panel of experts who not only had to be unanimous in their decision, but the offending country also had to agree to be tried. The WTO allows majority decisions, and the consent of countries to being judged is not required. Thus, it is now worthwhile for a country suffering from another’s discrimination against its product, to make a complaint. The WTO heard over 300 cases in the first five years of its existence, roughly as many as GATT had dealt with in its entire existence.
The problems that face the WTO in fact are of a different nature. It is increasingly seen, somewhat unfairly, as the main body responsible for economic globalization in a world where globalization has become deeply suspect to many radical political movements. This became apparent when the first international meeting of the WTO, held in Seattle (USA) in 1999, had to be broken off because of the sometimes violent protests taking place throughout the city. Subsequent meetings of international organizations, including the G-8, the World Economic Forum and the European Union, attracted similar protests, with varying degrees of violence, ostensibly in protest at the trade policies of the developed world.
Y
This is the complete article, containing 548 words
(approx. 2 pages at 300 words per page).
